Jumping straight from cash to mobile
There has been a great deal of speculation around the end of cash that has often dominated conversations around the future of payments. The unprecedented Coronavirus health crisis has only accelerated the demise of cash.
At the height of lockdown cash volumes in Spain dropped by 90%, in the UK the number of ATM transactions were down 62% and Austria, among the first countries to reopen bars and restaurants, has not seen a bounce back to pre-Covid levels of cash volume.
The rise in popularity of alternative and digital payments has been growing rapidly around the world, particularly in regions such as China, where at the start of 2020, just under half of in-store purchases were made digitally. Just as people in emerging markets leapfrogged a generation of fixed telephony and jumped directly to mobile, the same behaviour trend is likely to manifest in payment around the world.
We are about to witness the world skip the physical wallet of plastic cards and jump directly from cash to truly digital and mobile payment methods.
Getting rid of plastic
The majority of digital wallets are still enabled by traditional plastic cards behind the scenes and that’s the elephant in the room for many banks.
Issuing plastic cards relies on a real-world supply-chain, with a factory and distribution set-up that’s as vulnerable as any other physical process during a crisis. In fact, some issuers really did find it hard to maintain these operations at the height of the Covid-19 pandemic. Really, when you have a mobile wallet that acts as the proxy for a card, and all a card really represents is a string of 16 digits that link to a specific account, why do you need a plastic card at all?
Our issuing partners are asking this question more and more often and in the B2B world commercial cards are rapidly being replaced by virtual cards. They are typically provided on a one-off basis to cover each purchase and can include spend controls such as amounts, merchant codes and validity. The additional controls, security and authentication measures that mobile wallets can deliver are crucial for businesses who administering spend to thousands of employees
We are seeing more and more issuing banks championing virtual cards that feed directly into mobile wallets, doing away with plastic once and for all.
Accelerating the speed of innovation
Once a sleepy backwater of the payments world, the speed of corporate payment innovation is quickly reaching parity with the consumer world.
Thanks to our own work with Visa, their issuing partners can place virtual commercial cards on mobile for the first time. This is significant because it means a traveller can now pay for all on-trip expenses such as restaurant bills or taxis – anywhere contactless with an Apple Pay or Google Pay wallet, as well as their upfront air and hotel costs.
These were once payments business travellers made using cash or plastic, but as travel begins again, we expect travel managers to empower their people with the safest touchless payment experience possible.
As we continue to re-evaluate our behaviour in light of the pandemic it has become clear payments are going move to mobile at an ever faster rate.
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